Going into today’s session with my overnight short of PDO, I was confident, if not ecstatic because I’d shorted into the first negative day of a decent-sized runup, even if it was KOG-like commodity play. At the market open, volume was very very light—5,000 shares in 10 minutes and yet when sellers took out the one bid at $6.20 that took it all the way down to $6.01…I didn’t want to cover right away as I thought it’d take out $6 and then stop loss selling might cause some panic, but bids piled up at $6.02, then $6.03, then $6.05…screw that, I covered at the ask at $6.15, making $27 after commissions.
Afterwards, some more sellers did come in and on total daily volume of 25,000 shares, the stock was $5.90 x $6—so I left $100+ on the table…boooo hooo, due to the illiquidity and it not being an ideal play, I played it safe.
I was ripping my self until just after 11am when those who didn’t play it safe discovered what an illiquid short squeeze feels like as the stock surged from $6 to $7.5 in under an hour. While I frequently miss out on easy gains, I don’t risk large losses or disaster—and that’s something which I’ll always be proud to promote, especially because PennyStocking exemplifies conservative penny stock trading (yes there is such a thing), where you don’t have to be dead on all the time to make money.
PS This is hardly unique to PDO, see FEED’s chart below—the key is covering into that panic selling caused by stop losses, then you just stand aside and watch the longer term shorts squeal as FEED pig f$#@s them!
Tags: Breakdowns, Decent Trades, Patterns To Short, Short Selling
